23/11/2017 Daily Politics


23/11/2017

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LineFromTo

Hello and welcome to

the Daily Politics.

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In Yorkshire with Theresa May this

morning, it's all smiles.

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But are Philip Hammond's Budget

promises to cut stamp duty

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for first-time buyers

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and the three billion for Brexit

preparations being overshadowed

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by bleak economic forecasts?

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The gloomy news was delivered

to Mr Hammond

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by the Office

for Budget Responsibility.

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Dragged down by low productivity,

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Britain will grow far

slower than expected.

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We speak to their chairman,

Robert Chote, about the worst

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downgrade since 1983.

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But economists don't always

get everything right.

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For example, they didn't foresee

the 2008 financial crash.

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We debate how reliable economic

computer modelling really is.

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I did take the precaution of asking

my right honourable friend to bring

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a packet of cough sweets just in

case.

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And is it "Funny Phil" now

rather than "Fiscal Phil"?

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The Chancellor peppered his Budget

statement with a series of jokes,

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but did they add to his productivity

in delivering the Budget?

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All that in the next hour

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and with us for the whole

of the programme today is someone

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who probably enjoys Budget Day

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in the way the rest

of us enjoy Christmas -

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the economist Linda Yueh.

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Welcome to the programme.

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It looks as if Philip Hammond has

overcome the short-term political

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challenge of delivering

a controversy-free Budget.

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Yet while the Chancellor has

steadied the Tory ship,

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for now at least, the British public

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may well feel much

more gloomy today.

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The dire state of the public

finances -

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and the growth

forecasts in particular -

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provided him with little headroom

to go on a spending spree.

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But he did find money to scrap stamp

duty for the majority of first-time

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buyers and also to set aside

£3 billion for preparations

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for the UK to leave the EU.

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Well, earlier this morning,

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the Prime Minister was

asked what she thought

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of Philip Hammond's performance.

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The Chancellor did a very good job

yesterday. He was setting out how

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Willie will ensure we have an

economy fit for the future. But the

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Chancellor and I agree that what the

Budget was about was jobs for people

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up and down the country. It was

about insuring people are in work

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with that income for their family.

It's about building the homes that

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they need, and it's about ensuring

that we seize the opportunities for

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the future.

Linda Yueh, what were

your impressions of the Budget?

I

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was certainly worried about how

significantly downgraded economic

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growth was, and this came on top of

the fact that inflation is expected

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to be higher than 3%. So the economy

is only going at 1.5% for the next

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five years, and we have high

inflation. That is really going to

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squeeze incomes. That is why this

Budget was a real change in course

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for the government. In other words,

almost everybody I can recall, and

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it is a bit like Christmas like me

when it comes to Budget Day(!), they

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have always stressed how every

Budget is fiscally neutral, so money

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raised is by cutting taxes, but in

this case they wanted to stimulate

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the economy. In 2019-20, we were

expecting to run a Budget surplus of

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£10 billion. But now after this

Budget, or going to have a Budget

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deficit of £35 billion. Half of that

is because growth has become so slow

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that we won't get as much tax

revenue. But half of that is because

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I don't think the Chancellor has any

choice but to try to spend more in

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order to raise growth. And by this

measure, we will not have a Budget

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surplus until 2030. So he has

abandoned the idea of getting to a

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surplus.

If we remember, George

Osborne said we would eliminate the

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deficit by 2015. So it is going to

be 15 years late. But in your mind,

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did he have to add to borrowing in

some way in order to stimulate the

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economy?

I think he does. The main

problem with slow growth is that it

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makes your Budget deficit worse.

Slow growth means there is less tax

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revenue. So a lot of what he is

spending is on investment to boost

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productivity. Another big portion of

what he is spending it on is to put

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out fires around the NHS, preparing

for Brexit and houses, which is

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important. If he doesn't raise

growth, some may wonder why he

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didn't do more, why he is allowing

the economy to go into the doldrums

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at a much lower growth rate for the

next five years.

We are joined now

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by the #'s political editor Tom

Newton Dunn and Guardian columnist

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Polly Toynbee.

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Tom Newton Dunn, your newspaper and

the Daily Telegraph give the

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Chancellor relatively favourable

responses to the Budget. Why, when

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the UK will have one of the slowest

rate of growth in the G7 and

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productivity has been downgraded?

Relatively is the key point. We are

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not happy with everything he did

yesterday. In terms of the bigger

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point you have heard from your guest

in the studio, much of the problems

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faced by the Chancellor are not of

his own making. It is the biggest

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productivity downgrade since records

began in the biggest flat-lining of

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productivity since before the battle

of Waterloo, since 1812 full

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stoppages out of his control. So I

would agree with that analysis. I am

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not sure he had much choice. He had

to spend that massive £26 billion

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war chest he built up, the rainy day

Budget for tough times for Brexit,

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which begs the question, what on

earth is the government going to do

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next? If you look at the path of

deficit reduction now, it is barely

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going down. The deficit is still

going to be 35 billion in a few

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years' time. So I think it is

slightly dire straits now. This was

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an action by the Chancellor to keep

the government afloat in the short

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term, prime pump in all the money he

had into the economy to see what

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happens. He was even borrowing out

of his departmental spending

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reserve. He was taking 2 billion out

of that to plough into the economy.

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So it looks like he has done

everything he can and it is in our

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case of waiting to see if it works.

And there is of course the politics

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behind that. We will come to that in

a moment. Polly Toynbee, £25 billion

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of new spending.

Will that be

welcomed by Labour? It is an

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incredibly small sum. We are where

we are because of what this

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government decided to do. If you

look at the growth rate, it was

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going well when George Osborne took

over. But from his very first Budget

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in June 2010, growth fell off a

cliff and never recovered. That is

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what happens if you have an

austerity Budget and if you cut into

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the headwinds of a recession, and it

got worse and worse. The longest, as

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Tom says, that we have ever had, for

the very reason of taking this

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antique Ainslie in view. Keynes

would have said to the

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counterintuitive thing, to borrow

and spend into a recession. Growth

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is what pays off your debt. Growth

and productivity are the only things

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that can pay off your debt. So you

have to borrow, like a family would

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for a mortgage, in order to increase

your wealth in the longer run.

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Politically, let's talk about that,

Tom. He has survived. He hasn't

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tripped up on a banana skin, which

he did earlier in the year with his

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cut of national insurance

contributions for the self-employed.

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Was that the sole aim, to keep his

job and therefore keep the

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government going?

Yes, not just to

keep his job, but also to keep

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Theresa May in Number Ten. It was a

fascinating political U-turn

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yesterday, from Fiscal Phil, the man

who prides himself on having a tough

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hand on government spending across

all the departments from the MoD to

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the Foreign Office, now a year on,

he is spending like Corbyn.

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Everything he can get. He is not

spending the way Labour had

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proposed.

Polly should be delighted.

She's muffling her delight.

It is a

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very small sum. When he says 15

billion more for housing, it turns

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out that it is over five years. It

will build very few homes.

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Overnight, people have been

analysing some carefully. When it

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comes to Universal Credit, 300

million gets you almost nowhere in

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the appalling state of people moving

on to Universal Credit. These are

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little token sums. Those who didn't

follow them closely cheered on his

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side of the House because it sounded

good. A bit of something for

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everyone, a tiny bit for the NHS,

less than half of what it needed.

I

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agree that he hasn't spent things in

the right way, if that is what Polly

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is saying. I'm not sure where he

could spend more, because if we

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borrow more, the deficit will go up

the market would lose credibility

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and then we are into a sovereign

debt crisis. The problem is that

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they spent in the short term and

they have sought that Universal

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Credit and given money to the NHS,

but they have gone nowhere near

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tackling other problems. I was

deeply unimpressed by the housing

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measures. And also social care is

another huge problem. They're all

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the great demographic problems

facing the country which were left

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and tackled and getting worse by the

day. At some stage, some government

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will have to tackle them.

Finally,

Polly Toynbee, on trust with the

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economy, bearing all of that in mind

from both of you, why is it that got

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the Budget, the Shadow Chancellor

and Labour leader were trusted less

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on the economy than Hammond and May?

I don't think that will last long as

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people unpick this Budget. But more

to the point, overshadowing all

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this, despite this appalling long

recession which has been created by

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government austerity policies, we

have Brexit and what is this

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government's fault on the fault of

the fanatics on its front benches

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and the backbenchers.

Is it not the

fault of the people who voted for

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it?

Maybe, but they were lied to by

the likes of you and they still are.

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They would say there were lies on

both sides, Polly Toynbee.

It is

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turning out that the Remain side

were painfully right about the

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dreadful economic consequences and

much worse to come.

Thank you both

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very much.

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Now it's time for our daily quiz.

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Shadow Education Secretary Angela

Rayner has announced on Twitter

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that she has just passed a rather

important milestone in her life,

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so our question for today is...what?

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a) She's just bought her first

house, b) She's got a degree,

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c) She's passed her driving test

or She's become a grandmother?

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If it is her first home, she can

benefit from the stamp duty measure.

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At the end of the show, Linda

will give us the correct answer.

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So, it was the gloomy

outlook for the UK economy

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which overshadowed much

of Philip Hammond's Budget.

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The official forecasts for the UK

economy are delivered

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to the Treasury by the Office

for Budget Responsibility.

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The OBR was established in 2010

by then-Chancellor George Osborne

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to end a system under

which the Treasury produced its own

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economic growth estimates.

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Philip Hammond yesterday

delivered their latest

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downgraded predictions as part

of his Budget statement.

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Regrettably, our productivity

performance continues to disappoint.

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The OBR has assumed, at each

of the last 16 fiscal events,

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that productivity growth

would return to its pre-crisis trend

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of about 2% a year,

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but it has

remained stubbornly flat.

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So today, they revised down

the outlook for productivity growth,

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business investment and GDP growth

across the forecast period.

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The OBR now expects to see

GDP grow 1.5% in 2017,

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1.4% in 2018, 1.3% in 2019-2020,

before picking back up to 1.5%

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and finally 1.6% in 2022.

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The Chairman of the Office

for Budget Responsibility, or OBR,

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Robert Chote is here with us now.

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You live for these events, but grim,

Dyer, dismal, these are some of the

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words being used this morning to

describe Britain's economic

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forecast. In your view, how bad is

it?

Basically, the economy has been

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growing less quickly than expected

this year, which extends the story

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for 2017. More importantly, we have

taken a more pessimistic view over

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the next five years. That is a

reflection of the fact that growth

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in productivity, which is the amount

of output you get out of every hour

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that people work, has been growing

very slowly over the last ten years

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relative to the three or four

decades that came before it. A while

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back, people would have said you can

probably now that down to specific

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reasons related to the financial

crisis. But as this period of

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weakness has got longer and longer

the crisis recedes further into

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history, some of those explanations

fall away. Therefore, we have

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decided to place more weight on this

relatively weak period as a guide to

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what is coming. Another reason for

that is that this is also a global

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problem and not just a domestic one.

If you look at the way in which our

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American counterparts have been

changing their forecasts, the

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Congressional Budget office, there

is a similar pattern.

But you have

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revised Britain's growth forecast

down substantially since March.

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Let's look at the graph. What has

changed since then? You were more

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optimistic just months ago, you

would've had those figures then?

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When you are looking over this

period, you have to make judgments

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as you are going along, and do we

see are there reasons why it'll pick

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up? You don't want to focus on the

latest data, we have seen false

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dawns come and go. It is more a

question of looking back at this

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remarkably unusual period in recent

economic history and making a

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response to that. The economy will

grow at less than 2% for the a least

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the next five years, how much

smaller will the economy be over the

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next five years? Well, I mean, you

basically summed it up there. We

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used to get the idea that you would

expect large, mature industrial

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economies like the UK to grow by a

bit over 2%, maybe 2.5% a year and

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at the moment we are assuming 1.5%

is, as it were the new normal.

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Obviously you can add up the

ditches, however many years you go

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out to get as large a number as you

like.

How much will be taken out of

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the economy? The figures of £65

billion taken out of the economy

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over the next five years, are those

the figures that you recognise?

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Well, the potential size of the

economy is about 2% smaller at the

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end of the forecast horizon than it

would otherwise be. Obviously you

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can get as large a cash number as

you like by moving out and making

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the comparison.

Right, truth is,

forecasts are rarely correct. You

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said so yourself. And they are

routinely revised. It is entirely

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possible the Chancellor will prove

you wrong?

It is entirely possible

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the outcome is a 50/50 chance as to

whether it is higher or lower. One

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of the things we do in the report is

run alternative scone oar yes, sir

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for public finances on the basis of

what happens if productivity growth

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revives to the rates we saw prior to

the financial crisis and what

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happens if basically the last ten

years are the new normal? Now we are

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not as pessimistic, there are techno

pessimists out there who say we've

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had three industrial revolutions

that's your lot you will not see the

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revival in growth. I don't think we

are in that camp. There are reasons

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to think productivity will pick up,

unemployment is falling, that will

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produce more pressure on firms to

work things more productively so we

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don't give up hope of some recovery

there.

That means, the forecast

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could be more optimistic. It could

be worse, then?

I think there is a

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probability it could go either way.

To give awe rule of them in terms of

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what the growth rates mean for the

size of the British economy. You

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take the number 70, divide by the

growth rate that gives you the

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number of years it takes for an

economy to double in size. So the

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British economy grows, at say 2%,

let's keep the maths simple. 7 #0e

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divided by two, we expect it to

double in size in 35 years, if it

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grows closer to 1%, the economy

doubles in size in 70 years, that's

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why the small ditcheses in growth

rates have massive impact in terms

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of our living standard.

Right, let's

have a look at Brexit. You said

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yesterday the Government provided

the OBR with no meaningful basis on

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which to form a judgment on Brexit.

Do your forecasts take into account

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Brexit or not?

They did. We made an

adjustment in the first forecast we

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produced after the vote to Leave so.

That was the November forecast last

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year. And we haven't basically

changed the broad judgments around

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Brexit, both in terms. Process, and

in terms of the sorts of

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implications it would have for

things like productivity, trade

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intensity, migration we did then. So

the announcements we made or the

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updated forecast yesterday is much

more about looking at this

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historical pattern, the fact that

this is a common global feature,

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rather than that we have looked

again specifically at Brexit and

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said - we think the outcome of this

will be different from what we

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thought a few months ago.

What

information did the Government give

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you on Brexit?

We had and we have

asked for no more than what is the

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in the public domain. I wouldn't

come want to come here and say - of

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we have produced this set of numbers

that the Government has told me

0:19:040:19:07

something about Brexit I can't

share. The reason we ask this, when

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we are preparing the forecast it is

useful for us to know if the

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Government is going to put into the

public domain new information that

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may be relevant, which is why we

ask.

And they are not?

Well as you

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see we have the information that's

available to everybody else and we

0:19:210:19:24

wouldn't want to be doing tonight

basis of private information.

Well

0:19:240:19:28

it is not meaningful then, to use

your words f stlnt enough

0:19:280:19:32

information in the public domain to

make that judgment?

Well the

0:19:320:19:35

judgment, as I say, is based on

series of broadbrush assumptions

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Which? Think would be consist went a

wide variety of potential outcomes.

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Under most circumstances, you would

expect import growth and export

0:19:450:19:48

growth to be weaker for a period of

time than they otherwise would be,

0:19:480:19:52

that business investment will be

weaker because people will be

0:19:520:19:54

uncertain for the period that they

don't know what the end point is

0:19:540:19:59

going to be but what we don't done

is come up with a envelope and the

0:19:590:20:03

last page conclusion is where we end

up with the negotiations and pinning

0:20:030:20:06

the economics numbers to that.

Right. Probably wise. Jacob

0:20:060:20:11

Rees-Mogg, the Tory MP says the OBI,

yourselves work on false

0:20:110:20:18

assumptionless given to you by the

Treasury, he would like you to be

0:20:180:20:22

more optimistic on the tudgets of

Brexit?

Well, I wouldn't describe it

0:20:220:20:26

as false assumptions. I think Jacob

would take the view that Brexit

0:20:260:20:30

creates the opportunity for a whole

variety of other policy changes that

0:20:300:20:34

this gives a greater freedom to do

that which you could then

0:20:340:20:37

incorporate. Obviously we are basing

our forecasts on what current policy

0:20:370:20:40

S so this is one of the reasons why

it is difficult to nail it down very

0:20:400:20:45

precisely, if we get close to a

particular outcome, the Government

0:20:450:20:49

may announce other sets of

accompanying policy changes and

0:20:490:20:53

maybe Jacob sees scope in those to

provide a better outcome.

Do you

0:20:530:20:58

have any sympathy with what Jacob

Rees-Mogg says in terms of the

0:20:580:21:01

assumptions that both the Treasury

and Office for Budget Responsibility

0:21:010:21:04

are working from?

I think it is very

difficult for them. I thi, as Robert

0:21:040:21:08

says, you can only work with the

information that is currently given.

0:21:080:21:12

Their credibility would be in doubt

if they were to, I think deviate

0:21:120:21:15

from that and so, in their

forecasts, as we just said a moment

0:21:150:21:19

ago, it could be much better or it

could be much worse. It is based on

0:21:190:21:24

productivity but an element of t I

would surely think is also Brexit

0:21:240:21:27

because obviously the outcome could

be better or could be worse, based

0:21:270:21:33

on however the negotiations go.

There was one phrase, if I may, if I

0:21:330:21:36

could pick up with Robert that I

found in your report, it is the idea

0:21:360:21:41

of fiscal illusion. This is a really

rather, I think important concept

0:21:410:21:46

because we have been talking about

the Budget and the Government says

0:21:460:21:53

they will meet their fiscal target

of 2% of GDP of the structural

0:21:530:21:58

deficit but they have done by that

selling shares in RBS and in little

0:21:580:22:02

bit of what you describe yourself as

fiscal illusion. Does that actually

0:22:020:22:06

mean we shouldn't put too much

credence by this illusion that's

0:22:060:22:10

getting us to our deficit target?

Well I think it is always very

0:22:100:22:12

important. The fiscal illusion is

basically getting at the idea that

0:22:120:22:16

there are some changes which can

make the official numbers you are

0:22:160:22:19

looking at and that the Government

maybe targeted better, without

0:22:190:22:23

fundamentally changing the

underlying health of the public

0:22:230:22:25

finances and a key part of our job

is to raise a flag when those sorts

0:22:250:22:29

of things happen. Asset sales are a

very good example. If you sell

0:22:290:22:35

shares in RBS, for example, you end

up with that reducing the

0:22:350:22:38

Government's stock of debt. But in

fact if a Government owns an asset

0:22:380:22:43

and sells it for roughly what it is

worth. It is no better or worse off,

0:22:430:22:47

it has swapped one asset, shares in

a bank, for a lump of cash. We need

0:22:470:22:59

to flag that up. The other big...

Housing associations.

The statical

0:22:590:23:04

decision to count them as part of

the private sector rather than

0:23:040:23:07

public sector but do we really

believe the Government's behaviour

0:23:070:23:11

if the housing association sector

got into difficulties would be

0:23:110:23:14

markedly difficult because a

newspaper of statisticians in

0:23:140:23:16

Newport have applied the

international rules and concluded it

0:23:160:23:19

is one side of the boundary or the

other?

Is that the illusion?

Well,

0:23:190:23:24

it helps in both reducing the level

of Government borrowing and the

0:23:240:23:28

level of Government debt because you

are taking off the borrowing and the

0:23:280:23:32

debt of the housing association. The

Government has been remarkedly

0:23:320:23:37

candid about why it has taken the

measures in deregulating the sector

0:23:370:23:42

to do that. They gave evidence to

the House of Lords to say - we are

0:23:420:23:48

doing this to persuade the

statisticians to get this off the

0:23:480:23:50

books.

Criticising the Government's

stamp doubty property, you say house

0:23:500:23:57

price also go up. Do you accept it

is quite a political statement to

0:23:570:24:02

make within hours of the Budget

being delivered Its not a criticism.

0:24:020:24:07

Now not saying it shouldn't happen.

It is explaining how it'll feed

0:24:070:24:11

through into the economic and

fiscaler if cast. You can certainly

0:24:110:24:14

take the view that the policy is a

good or bad policy. We have to

0:24:140:24:18

describe what impact it has.

But

that is a critcy. If you say the

0:24:180:24:23

bhan gainers are people who own

their own proort when it is supposed

0:24:230:24:26

to help first time buyers who

haven't been able to get up and that

0:24:260:24:29

house prices will go up and act as a

stimulus. That's a criticism

No it

0:24:290:24:35

is a statement of the facts. If

house prices go up. It gives first

0:24:350:24:42

time buyers who purchase properties

that they otherwise wouldn't have

0:24:420:24:45

blown able to afford but they are

more expensive and I expect with

0:24:450:24:50

#23is time buyers, it is the act to

get on the ladder even if the

0:24:500:24:55

property is more expensive, than a

good thing about that policy. I

0:24:550:24:58

wouldn't read it that as a criticism

of the policy it is a criticism of

0:24:580:25:03

what it does.

0:25:030:25:09

The growth forecasts may have been

revised down but the Chancellor

0:25:090:25:11

still had some money to give away.

0:25:110:25:13

Let's have a look

at the key policies.

0:25:130:25:15

Philip Hammond set aside £3 billion

over next two years to prepare

0:25:150:25:18

the UK for every possible outcome

as the UK leaves the European Union.

0:25:180:25:21

For housing the Chancellor

outlined a £44 billion

0:25:210:25:28

government support package,

to help meet a government target

0:25:280:25:31

of building 300,000 new homes a year

by the middle of next decade.

0:25:310:25:34

And stamp duty will be abolished

immediately for first-time buyers

0:25:340:25:41

purchasing properties

worth up £300,000.

0:25:410:25:42

The young person's railcard will be

extended to 26-30-year-olds

0:25:420:25:46

from next year, saving a third

on off-peak railfares.

0:25:460:25:50

The NHS in England will receive

an extra £2.8 billion worth of extra

0:25:500:25:53

funding for front line services.

0:25:530:25:55

With £350 million available

immediately to address

0:25:550:25:57

pressures over this winter.

0:25:570:26:06

The Chancellor proclaimed "maths

for everyone" with £600 for each

0:26:100:26:12

additional pupil taking A level

or Core maths.

0:26:120:26:14

A £40 million teacher training

fund will be established

0:26:140:26:16

for underperforming schools

in England, working out

0:26:160:26:18

at £1,000 a teacher.

0:26:180:26:19

And changes to Universal Credit

to bring the overall waiting time

0:26:190:26:22

down from six weeks to five.

0:26:220:26:26

Joining us are the Justice

Minister Dominic Raab

0:26:260:26:28

and the Shadow Economic Secretary

to the Treasury.

0:26:280:26:34

Welcome to both of you. Jonathan

Reynolds, I didn't say your name,

0:26:340:26:40

which is important, of course.

Dominic Raab, Philip Hammond started

0:26:400:26:45

his statement on the Budget

yesterday saying will - there is a

0:26:450:26:49

bright future for Britain. Are the

resolution association disagree say

0:26:490:26:55

there'll be 17 years of pay

stagnation.

Interestingly the

0:26:550:26:59

Resolution Foundation also said that

those on the lowest I parks the

0:26:590:27:02

proportion on the lowest pay is at

its lowest level since the 1980s. I

0:27:020:27:07

think we have had some headwinds. I

think the economists are not quite

0:27:070:27:10

clear between themselves as to some

of the forecasts which is

0:27:100:27:12

interesting, the conversation you

have just had. The reality is there

0:27:120:27:15

are all these predictions of doom

Ian gloom and precession and we have

0:27:150:27:20

modest growth inhe has put in a

modest stimulus in and things like

0:27:200:27:25

the £08 billion extra in partnership

with the sector on tech and R&D that

0:27:250:27:31

will help boost in the long-term

productivity. He dealt with the

0:27:310:27:35

issues around here and now,

extending personal allowance, fuel

0:27:350:27:41

duty and laid foundations to deal

with the productivity. I think that

0:27:410:27:44

compares the credible, balanced

approach he took with John McDonnell

0:27:440:27:47

this morning on the Today programme

saying spending and borrowing more

0:27:470:27:52

pays for itself.

Right, but wages

won't return to the 2007 levels,

0:27:520:27:58

pre-crash levels until 2025. That

squeeze is going to really hurt

0:27:580:28:03

families. And it's the longest fall

in living standards since records

0:28:030:28:07

began. Is that something you are

proud of?

I think really conscious

0:28:070:28:12

of the priors on low and middle

income fwamlies but I would say the

0:28:120:28:16

average tax pay letter take home

£1,075, a basic rate taxpayer than

0:28:160:28:23

under Labour Government in 2010. We

had that statistics from the

0:28:230:28:28

Resolution Foundation, the

proportion...

Except one-third of

0:28:280:28:30

households, this is what you are

saying the poorest third of

0:28:300:28:33

households are set to be more

thanneds 700 a year worse under the

0:28:330:28:37

plan?

Under the enfundamentals of

the economy.

Answer the question

I

0:28:370:28:41

will answer the first then come

back. Inflation has reached its peak

0:28:410:28:45

of 3% in October and is now coming

down, so it'll ease the pressure.

It

0:28:450:28:51

hasn't

If you listen to what the

Bank of England said last week n

0:28:510:28:54

October the 3% was the peak and

it'll start to come back down.

It

0:28:540:28:57

hasn't come down yet

I'm in the

doubting there are pressures, but it

0:28:570:29:01

is not all doom and gloom and it was

great to here a Conservative

0:29:010:29:05

Chancellor who didn't vote for

Brexit say - come on, there is there

0:29:050:29:09

are risks, but even greater

opportunities and we will grasp

0:29:090:29:11

them. We need candour in this

country.

Well -- can do. Well you

0:29:110:29:16

talk about can do but he talked

about a bright future for working

0:29:160:29:19

families and if they are not looking

forward to wages getting to the

0:29:190:29:22

stage they were prethe crash, what

are they going to be looking forward

0:29:220:29:25

to?

I don't accept that. The

Resolution Foundation is a

0:29:250:29:31

think-tank and does good work. And I

have cited them.

Cited the bits you

0:29:310:29:34

like and not what you don't. Can you

explain that poorest households are

0:29:340:29:38

going to be £700 a year worse off?

We went through and it was

0:29:380:29:45

interesting hearing Robert Chote

hark back to the crash, but we have

0:29:450:29:49

dom through, employment at record

highs, three-quarters new jobs

0:29:490:29:53

full-time and on things like the

national living wage, the extension

0:29:530:29:57

of the personal allowance,

cancelling the planned fuel duty

0:29:570:29:59

hike, we are doing things that deal

with the pressures of the here and

0:29:590:30:02

now, but also take the long-term

investment like infrastructure

0:30:020:30:07

technology, that will boost wages

through productivity gains.

He did

0:30:070:30:11

the minimum he could the with

headroom he had which is little when

0:30:110:30:14

we look at big figures, you talk

about the national living wage but

0:30:140:30:18

George Osborne pledged it would

reach £9 by 2020, that will not

0:30:180:30:22

happen now

Hold on. We are in 2017,

it is going up to April £7.83. We

0:30:220:30:28

have produced that

Will approximate

hit £9?

Well that's forethe

0:30:280:30:33

Chancellor and we've scrutinised

what he said yesterday. We can say

0:30:330:30:35

it is going up to £7.83. We are

cutting the amount of income tax

0:30:350:30:41

people are pay, the average taxpayer

but over £1,000 each year compared

0:30:410:30:44

to 2010 but we have to be balanced

and responsibility. We cannot do as

0:30:440:30:47

John McDonnell and Labour said first

thing this morning - by throwing

0:30:470:30:51

money at problems, it is not

credible. What he has done in

0:30:510:30:55

challenging times is a balanced,

credible approach...

0:30:550:31:02

But balance in favour of whom?

Philip Hammond has said he wants to

0:31:020:31:08

put £3 billion aside for Brexit

preparations, but only £350 million

0:31:080:31:12

extra funding for the NHS this

winter. Which is more important to

0:31:120:31:16

you?

They are both important.

Then

why has Brexit got £3 billion and

0:31:160:31:22

the NHS only 350 million?

Studies

from a standing start and

0:31:220:31:27

contingency plans for Brexit. The

NHS is getting huge amounts of extra

0:31:270:31:31

money.

Does the NHS not deserve more

money?

I think the NHS is getting

0:31:310:31:38

extra investment.

Not the 4 billion

that Simon Stephens said is

0:31:380:31:41

necessary.

We have followed Simon

Stephens' route map to this. More

0:31:410:31:47

money is going in, but we also need

to reform the NHS. Compared to 2010,

0:31:470:31:53

someone is paying two thirds less

income tax. The millionaires are

0:31:530:31:58

paying 14% more.

Let's look at the

other bits of this balanced

0:31:580:32:03

approach, Jonathan Reynolds. Do you

oppose the scrapping of stamp duty

0:32:030:32:07

for first-time buyers?

If a Labour

government presented the figures we

0:32:070:32:10

saw yesterday, Dominic, who I have

tremendous respect for, would be

0:32:100:32:13

laying into those figures. The stamp

duty cut was an Ed Miliband policy

0:32:130:32:25

originally.

It wasn't just his, it

was proposed in your manifesto. So

0:32:250:32:30

you support it?

Yes, but you have to

combine it with mixed supply. The

0:32:300:32:39

beta site, £3 billion, is on the

stamp duty cut. Unless you are

0:32:390:32:43

boosting supply % and having more

homes for social rent, it will only

0:32:430:32:50

make the situation worse.

So how

much more would you spend on

0:32:500:32:54

housing?

In our investment

programme, we have said we would put

0:32:540:32:56

more investment in. The allocation

for housing is 25 billion. The

0:32:560:33:01

increase for housing would be 8

billion, because that gives you the

0:33:010:33:04

chance to have more homes for social

rent.

How many more homes for social

0:33:040:33:08

rent would later be proposing?

100,000.

So you are going to be

0:33:080:33:14

adding to the money that the

government would borrow. Do you

0:33:140:33:17

think it is acceptable that the

Shadow Chancellor couldn't cite what

0:33:170:33:20

the current levels are in terms of

servicing the debt, never mind what

0:33:200:33:23

they would be under Labour?

I don't

think it's fair to ask the Shadow

0:33:230:33:26

Chancellor to pick out a figure from

the red book.

Hang on, which figure

0:33:260:33:31

in terms of the current levels of

servicing the debt?

The £46 billion.

0:33:310:33:37

Then you can do it. Is it acceptable

that the Chancellor can't?

There

0:33:370:33:43

would be a variability to the cost

of borrowing under a Labour

0:33:430:33:45

government. The point that John is

trying to make, which is worth

0:33:450:33:49

making, is that if you look at the

crucial topline news in the Budget,

0:33:490:33:53

the big downgrade to growth, the

country has to do something

0:33:530:33:56

different. And bringing forward

investment into infrastructure,

0:33:560:34:00

housing and transport is the right

thing to do. If you look at the long

0:34:000:34:03

term effect on the tax base of this

continuing, we will have huge

0:34:030:34:08

problems.

In terms of money for the

NHS, did you welcome the £2.8

0:34:080:34:13

billion proposal by Philip Hammond?

We want to see more than that. We

0:34:130:34:17

want to see something equivalent to

what the NHS itself has said it

0:34:170:34:20

needs. It is not always about extra

borrowing, there is also a point

0:34:200:34:25

around choices and priorities. More

money going to Brexit that the NHS

0:34:250:34:28

does not sound like the right thing

to do. More money going into alcohol

0:34:280:34:33

duty than fixing Universal Credit,

those are bad choices. If look at

0:34:330:34:39

the envelope the Chancellor had, he

has made poor choices.

What do you

0:34:390:34:42

say to it being not the right

choices?

You have a vast credibility

0:34:420:34:49

gap between a balanced approach, yes

we need a stimulus, but with overall

0:34:490:34:54

public finances. We have a Labour

Shadow Chancellor who reckons that

0:34:540:34:58

spending and borrowing pays for

itself. That is just not credible

0:34:580:35:01

and it is dawning on many people

that these are false promises. It is

0:35:010:35:05

a con.

What was a con about George

Osborne saying he would eliminate

0:35:050:35:10

the deficit by 2015 and it will now

not be eliminated until 2031.

Well,

0:35:100:35:15

that was a target.

A target that you

miss every year in terms of

0:35:150:35:20

eliminating it. And it was to be £35

billion. When you talk about trust,

0:35:200:35:26

what is the point of saying to

people, bear the pain now of

0:35:260:35:30

austerity because we are going to

remove it for future generations? It

0:35:300:35:33

is still going to be there.

Well,

hold on. That is based on

0:35:330:35:39

projections made in 2010. We would

say, look at the 3 million new jobs.

0:35:390:35:44

Look at the extra money we have made

sure working people have in their

0:35:440:35:49

pay packets. Look at the extra

investment in the NHS. If you

0:35:490:35:52

compare that what John McDonnell

said this morning he said that

0:35:520:35:56

spending and borrowing pays for

itself. That be credible.

Is

0:35:560:36:03

government spending and borrowing

now paying for itself?

The economy

0:36:030:36:07

has not hit rock bottom.

Our point

is, if you can get a bigger return

0:36:070:36:16

for the taxpayer by borrowing at

record low levels, that is something

0:36:160:36:20

you should consider. And that was

what was ruled out under the George

0:36:200:36:24

Osborne has Charter. Now members of

your Cabinet are coming forward with

0:36:240:36:27

plans on housing...

But not to say

borrowing pays for itself.

You said

0:36:270:36:34

earlier that that is perhaps what

Philip Hammond should have done, to

0:36:340:36:38

have thrown away the red box and the

red book in terms of constraint and

0:36:380:36:41

spent more.

I would reconfigure the

red box. The government has not

0:36:410:36:48

separated out current spending from

capital spending. The only way to

0:36:480:36:53

raise productivity, and it is a

puzzle, but the key thing the Bank

0:36:530:36:56

of England identifies is that you

have to raise investment. Investment

0:36:560:37:00

in things like hard and soft

infrastructure and human capital, if

0:37:000:37:03

you count that as capital spending,

you can borrow at very low rates and

0:37:030:37:06

invest in something which will be

paid off in the future. And you can

0:37:060:37:10

separate out from current spending

so that you don't scare financial

0:37:100:37:12

markets. That is something where he

could have done more, given how dire

0:37:120:37:19

our productivity prospects are. But

it does require reconfiguring how we

0:37:190:37:25

think about the deficit.

So is

Labour's plan credible if you

0:37:250:37:31

reconfigured the red box in the way

you have?

I think their plan goes a

0:37:310:37:35

bit further from the manifesto. The

sense of borrowing and nationalising

0:37:350:37:41

major infrastructure, there is a

huge cost associated there.

Which

0:37:410:37:44

they have not given us.

Yes. That is

a problematic area to me. I am

0:37:440:37:51

describing something which is more

straightforward. Private firms are

0:37:510:37:54

not investing in part because public

investment has been slashed to less

0:37:540:37:58

than 2% of GDP. It used to be over

3% of GDP before the crisis. Sorry

0:37:580:38:04

telecoms company cannot put in a

better fibre line unless the

0:38:040:38:08

government gives them that basic

structure. We can't have better jobs

0:38:080:38:11

in the future unless there is more

investment in technical education.

0:38:110:38:15

That is why there is a good argument

for putting investment in human

0:38:150:38:19

capital, people as well as hard and

soft infrastructure, and that would

0:38:190:38:23

go a long way without going into

some of the more politically

0:38:230:38:26

disputed areas.

But it is

interesting that Labour still trails

0:38:260:38:33

in terms of Corbyn and McDonnell

versus Hammond and May when it comes

0:38:330:38:37

to trust in the economy.

There are

eight points behind.

If you look at

0:38:370:38:43

under 50s, we now lead on the

economy, so we have seen a change in

0:38:430:38:49

perception. In 1997, we were

trailing on the economy and we still

0:38:490:38:52

won a landslide victory.

Is that

what you are predicting?

I wouldn't

0:38:520:38:58

go as far as that!

Thank you both

very much.

0:38:580:39:02

Now, "Trust me, I'm an Economist" -

it's not a phrase I suppose my guest

0:39:020:39:05

of the day Linda Yueh utters

everyday.

0:39:050:39:07

And economists have had

a rough ride of it of late.

0:39:070:39:10

Blamed for not predicting

the financial crisis nine years ago,

0:39:100:39:12

a good number then got criticised

for scare-mongering over what might

0:39:120:39:15

happen after Brexit.

0:39:150:39:16

But is that fair?

0:39:160:39:17

Here's Ellie.

0:39:170:39:23

It was a question that baffled lots

of us, even the Queen, who famously

0:39:230:39:28

asked, how did no one predict the

financial crisis? She got an answer

0:39:280:39:32

of sorts, and then said what we were

all thinking.

The people have got a

0:39:320:39:41

bit lax, have they?

Maybe it wasn't

that simple.

A bit like geologists

0:39:410:39:47

and earthquakes, we know where the

fault lines are, we have a good idea

0:39:470:39:50

of where the earthquake will happen,

but within a few years, we don't

0:39:500:39:54

know exactly when and which region

will be the most. It was like that

0:39:540:39:59

in the lead up to the financial

crisis. If you read any of the

0:39:590:40:03

journals and policy papers, it was

clear that we understood the risks.

0:40:030:40:06

We just didn't know exactly where

the earthquake hit.

Today a woman

0:40:060:40:14

rang the BBC and said she heard

there was a hurricane on the way.

0:40:140:40:17

Don't worry, there isn't. Here is

another analogy. Economists can

0:40:170:40:23

forecast based on certain

conditions, but we shouldn't think

0:40:230:40:26

of them as predicting the future.

There is another problem too.

The

0:40:260:40:32

essential fear of financial

economics is that you can't predict

0:40:320:40:34

things like the financial crisis

because it is in the nature of such

0:40:340:40:38

predictions that the result of

predicting it in a reliable way

0:40:380:40:41

would mean that it wouldn't happen.

So if I tell you the stock market is

0:40:410:40:45

going to drop by 20% tomorrow, then

you will not have your money in the

0:40:450:40:49

market tomorrow. So it will drop the

day before or the day before that,

0:40:490:40:54

so I will not be right and the crash

I predict will not happen.

So is

0:40:540:40:57

that what happened after the EU

referendum?

You have a situation

0:40:570:41:02

today where you have a Conservative

Chancellor and a Labour Chancellor

0:41:020:41:06

both saying to the country that

there will be a big hole in the

0:41:060:41:10

finances...

Brexiteers called a

product fear, a consensus among

0:41:100:41:13

economics types including the then

Chancellor that Brexit and the vote

0:41:130:41:18

to leave would damage the British

economy.

Economists overplayed their

0:41:180:41:22

hand significantly on Brexit in two

key ways. They claimed to be experts

0:41:220:41:26

about matters that they weren't

expert in, namely what some of the

0:41:260:41:31

political implications would be both

of staying in the EU and of leaving.

0:41:310:41:34

And secondly, when things didn't

play out as they expected, they

0:41:340:41:39

tried to suggest that that was

something to do with the economic

0:41:390:41:41

models that they were using instead

of taking on the chin that they had

0:41:410:41:45

got wrong what the economy believed

would be the long term implications.

0:41:450:41:51

Economics and predictions. That's

what this was about yesterday. The

0:41:510:41:55

Budget was full of forecasts and

policies based on forecasts. But

0:41:550:41:59

maybe if the politicians who don't

use economics properly.

The choices

0:41:590:42:05

they make may not fully reflect the

consensus of economics. They may be

0:42:050:42:09

a result of their own private

preferences, or the result of the

0:42:090:42:14

way they have to confront their own

parties, or the political agenda in

0:42:140:42:17

front of them. It seems to me that

the best politicians are ones who

0:42:170:42:21

can understand what the science

says, whether it's on global warming

0:42:210:42:24

or smoking or the impact of

introducing trade costs, and

0:42:240:42:30

confront that and design policies

designed to deal with the real

0:42:300:42:34

risks.

When it comes to predicting,

maybe it's not economics at fault,

0:42:340:42:38

but the economists themselves,

politicians and the public's

0:42:380:42:43

unpredictable behaviour that makes

it so difficult.

0:42:430:42:46

Joining us now is Joe Gladstone,

0:42:460:42:47

a behavioural economist

from University College London.

0:42:470:42:53

Why do economists keep getting it

wrong?

One reason is that it is

0:42:530:42:58

difficult to predict the future with

economic models because economists

0:42:580:43:01

want to have a theory of everything.

They want to turn people into little

0:43:010:43:05

robots that always try and maximise

their own well-being. But you and I

0:43:050:43:08

know that that is not how people

behave. Humans are irrational. They

0:43:080:43:13

make mistakes, and if these models

don't take that into account, what

0:43:130:43:16

do they tell us?

We know that humans

are not rational, so what is the

0:43:160:43:22

point of all this forecasting?

I am

not sure sometimes. You know the

0:43:220:43:27

phrase that economic forecasting

exists to make astrology look

0:43:270:43:29

respectable! The problem with policy

is that you need to have some basis

0:43:290:43:36

to decide how the economy will be in

the future. There is a need to make

0:43:360:43:41

forecasts, but I don't like the

excessive reliance on forecasts. The

0:43:410:43:44

other thing I don't like about

forecasts generally is that they

0:43:440:43:47

rely too much on simple models of

how people, if you have a tax cut,

0:43:470:43:53

people will spend more, but that is

not true. A lot of people save if

0:43:530:43:56

they are struggling. Why would you

spend more even if you have a tax

0:43:560:43:59

cut? If you put that together, it

requires rethinking the basis of

0:43:590:44:04

economic forecasting, but also

accepting that the likes of the

0:44:040:44:07

Treasury and the OBR need something

to say the economy is expanding or

0:44:070:44:13

shrinking, but we should not put too

much stress on it being our future.

0:44:130:44:16

And it is not just people who don't

behave in a linear way. Markets

0:44:160:44:21

don't always function properly. Some

would say they haven't functioned

0:44:210:44:24

well at all over the last decade.

That is true. People and markets are

0:44:240:44:30

imperfect and these models are not

good at distinguishing between them.

0:44:300:44:34

If we could all predict the future

with some wheezy model, we would set

0:44:340:44:38

up a hedge funds and be a

billionaire next year.

I would not

0:44:380:44:41

be sitting here.

It is just that

complexity, the chaos of all these

0:44:410:44:48

individuals with their complex minds

and personalities and

0:44:480:44:52

individualisms, and then the market,

which is also complex and follow

0:44:520:44:55

normal ways of doing things.

0:44:550:44:59

People want to see evidence of what

policies are based on and there has

0:44:590:45:03

to be some forecasting. Do we help

the situation by criticising it and

0:45:030:45:08

dismissing and saying - all

forecasts are wrong, so I'm it never

0:45:080:45:12

going to believe anything you say or

does it make the job of economic

0:45:120:45:16

forecasting more difficult?

First we

have to accept the world is

0:45:160:45:19

uncertain and we cannot know with a

huge degree of accuracy what is

0:45:190:45:23

going to happen in future, we have

to accept that. The best models we

0:45:230:45:28

have are probably from economists,

there is not an alternative, we

0:45:280:45:33

cannot go to psychologists or

sociologists and say - tell us what

0:45:330:45:36

the economy is going to do. We have

to accept the limitations of what we

0:45:360:45:39

have and figure out how you can

explain that to the public that the

0:45:390:45:43

world is uncertain and this model is

the best thing we have.

We wouldn't

0:45:430:45:47

be better off without economic

forecasting. How could it be be made

0:45:470:45:50

better? ? I think one way it could

be made better is right now it tends

0:45:500:45:55

to extrapolate a lot from the past.

Almost every single model is saying

0:45:550:46:00

what happened in the past.

If you

have not had a recession in the last

0:46:000:46:06

eight years you are unlikely to

predict one. So the first thing to

0:46:060:46:11

do is redress the reliance on

ex-traplation. Looking at Government

0:46:110:46:17

spending gives you a better in the

of US it is called of dynamic

0:46:170:46:23

scoring. You put it policy out and

cost tonne that basis.

Do you need

0:46:230:46:28

more time? Do you have a tax cut or

rise, when policies come and you

0:46:280:46:32

have in place for one or two years,

is it long enough to say it it has

0:46:320:46:37

worked or failed

It is tricky and

what I'm described also takes a lot

0:46:370:46:42

more preparation before you roll out

policies so you can decide on the

0:46:420:46:47

impact but politicians work on four

or five year cycles, and it

0:46:470:46:53

generally isn't a luxury they have.

And everybody says they have their

0:46:530:46:56

own economic expert to back up

whatever their policy is. You can

0:46:560:47:01

pretty well forecast and predict

whatever economics you like, because

0:47:010:47:04

there will be an economic expert to

back it up?

There is varyings in

0:47:040:47:06

opinion and it is possible to find

an speshgts who is likely to support

0:47:060:47:10

your case. But at the same time,

there is Bert and worse science.

0:47:100:47:14

Things are moving forward there, a

gold standard in terms of these

0:47:140:47:18

field experiments or natural

experiments, so, it isn't like we

0:47:180:47:20

are just walking around in the dark.

There is the science out there. The

0:47:200:47:23

problem is that that science is

complicated. It is difficult to

0:47:230:47:26

explain to the public. It is

difficult to turn into a policy

0:47:260:47:30

sound bite and so, that's really the

problem we have in politicians using

0:47:300:47:33

this information.

Thank you very

much. Well economics may be

0:47:330:47:36

difficult to forecast but I have to

say politics hasn't been that easy

0:47:360:47:39

to forecast either.

0:47:390:47:49

Is Germanys facing one of the worst

political crisis of its modern

0:47:510:47:53

history?

0:47:530:47:55

Angela Merkel's party have failed

to form a coalition.

0:47:550:47:57

Last weekend, efforts to forge

a three-way coalition

0:47:570:47:59

with the pro-business Free Democrats

and the Greens collapsed,

0:47:590:48:01

raising fears across Europe

of a prolonged leadership vacuum.

0:48:010:48:08

Today Germany's President has urged

the social Democrats. Led by former

0:48:080:48:13

EU president, Martin Schulz, to

reconsider their oppies to joining a

0:48:130:48:17

new grand coalition with their

Christian Democrat party. What are

0:48:170:48:19

the options for Germany now and what

impact does it have for the UK and

0:48:190:48:23

Brexit?

0:48:230:48:28

Joining me now are journalists,

John F Jungclaussen from Die Zeit

0:48:280:48:31

and Stefanie Bolzen from Die Welt.

0:48:310:48:32

How unpress departmented is the

situation in Germany now?

It is

0:48:320:48:38

unprecedenteded. We haven't had this

kind of situation but there are ways

0:48:380:48:41

to deal with T the constitution is

very clear about the next step that

0:48:410:48:45

needs to be taken here. -- to deal

with it.

Angela Merkel has suggested

0:48:450:48:49

she would rather have another

election. Well that's what she said,

0:48:490:48:54

than govern in a minority

government. How likely is it for new

0:48:540:48:58

elections? The is fluid. I wouldn't

bet on anything for the time being

0:48:580:49:03

but doesn't look like a new election

now. The reason being - for today,

0:49:030:49:07

tomorrow we could be in a different

situation. I like the caveat, in

0:49:070:49:11

temples predists. Dump -- in terms

of predictions.

But Angela Merkel is

0:49:110:49:21

in a comfortable position because it

is the SPDs, they cannot risk

0:49:210:49:26

elections, because the German public

sees them as the one that is have to

0:49:260:49:29

move. If they don't come into a

co-laylies with Angela Merkel or

0:49:290:49:34

support a minority Government and

therefore trigger new elections they

0:49:340:49:38

will be hammered in 2018

That is

That's the dilemma for the SPD. Is

0:49:380:49:44

Angela Merkel really in a

comfortable position. This must have

0:49:440:49:49

come as a shock, she was said

tonight leader to ruffal trump. And

0:49:490:49:57

it hasn't happened?

Yes -- to rival

Donald Trump. Well before the last

0:49:570:50:03

election her personal popularity

ratings were extraordinary. Over 52%

0:50:030:50:06

of the population favoured her as a

leader. Of course that was not

0:50:060:50:10

reflected in the outcome of the

election. But there is a great deal

0:50:100:50:15

of goodwill that people have and

that's why I think she would opt for

0:50:150:50:19

a new election, if she had it her

way.

Right she's obviously banking

0:50:190:50:24

on the fact that people voted for

parties perhaps thinking she would

0:50:240:50:28

walk it, would put their vote behind

her but it is a massive gamble to go

0:50:280:50:33

for another election?

It is,

It is,

it is something unprecedented in

0:50:330:50:38

Germany. The Germans don't want T

they don't want instable. Thankfully

0:50:380:50:43

the economy is going well. Data

growth is coming, low unemployment

0:50:430:50:46

it is not the economic pressure for

the time being but talking about

0:50:460:50:49

Angela Merkel, she has been there

for 12 years now, it was always to

0:50:490:50:53

be expected sooner or later people

thought she ought to go. The

0:50:530:50:56

question is, when is she going and

there is no successor at the horizon

0:50:560:51:00

for the time being.

Germany often

spends time putting coalitions

0:51:000:51:05

together and we don't quite have

that experience in this country.

0:51:050:51:08

Whep we had the coalition it

happened relatively quickly compared

0:51:080:51:11

to Germany. That does leave a bit of

a vacuum doesn't it, in terms of

0:51:110:51:15

Europe and when we look at Brexit,

what impact will it have?

Well, I

0:51:150:51:21

think it is one thing one cannot

repeat often enough on British

0:51:210:51:26

television, is that Brexit is not on

top of the list of any German

0:51:260:51:29

Government.

We've gathered that.

Good. I think what is more important

0:51:290:51:38

is issues that are coming up in

Europe next year, such as elections

0:51:380:51:43

in it lane the threat of the rising

-- Italy and the threat of the

0:51:430:51:47

rising populist right there. The

euro needs to be sorted out. There

0:51:470:51:51

is the issue of migrants who are

still drowning in the Mediterranean.

0:51:510:51:55

What Brexit has done to Europe, is

that Europe is coming closer

0:51:550:51:59

together. The 27 are closing ranks,

very successfully, I think. And

0:51:590:52:05

there are a lot of issues that need

sorting out and I think for those

0:52:050:52:13

issues, a weak government in Berlin

is a lot more difficult to sort out

0:52:130:52:16

than Brexit. I don't think Brexit

will be affected by this situation.

0:52:160:52:23

Except if the SPD under Martin

Schulz, the left-of-centre party

0:52:230:52:27

decide they want to get into a

coalition and there was to be a

0:52:270:52:31

grand coalition with Angela Merkel,

we know Martin Schulz is not a fan

0:52:310:52:35

of Brexit. Could he make things

difficult if he were part of a if

0:52:350:52:39

you tour German Government?

At the

end of the day in Britain there is a

0:52:390:52:44

lot of delusion about how much would

change if the Liberal Democrats

0:52:440:52:49

pro-business would be in the

coalition. It always be a very prong

0:52:490:52:54

pro-European Government. It won't

make much of a difference. It won't

0:52:540:52:57

make a difference for the December

council, whether Angela Merkel is

0:52:570:53:00

there or not. It is not in the hands

of the Germans to say - OK, you pay

0:53:000:53:04

£10 billion less, it is not.

Really?

But the Germans are so important.

0:53:040:53:08

There was much made of the

relationship at the same time

0:53:080:53:12

between David Cameron and Angela

Merkel and people thought she'd let

0:53:120:53:14

him down and there is still sort of

hope that Angela Merkel will be the

0:53:140:53:17

ones that will go over the heads of

everybody else and perhaps push

0:53:170:53:20

things along. When she's distracted

and it is not top of her list, has

0:53:200:53:24

it gone?

A lot was made of it in

Britain, yes, but not so much in

0:53:240:53:29

Germany and Berlin or Brussels.

Are

you worried about this dilemma,

0:53:290:53:34

really in Germany and this Ince

stability while -- instability while

0:53:340:53:41

she tries to decide for a coalition

or another election?

Well I'm more

0:53:410:53:49

worried now. Well Michel Barnier,

the EU negotiator he has delegated

0:53:490:53:56

authority a mandate given to him to

negotiate so on aspects that Britain

0:53:560:54:01

would like something more bespoke,

whether around Northern Ireland or

0:54:010:54:05

Ireland or the divorce bill or trade

deals, the thought was he could get

0:54:050:54:10

that authority, perhaps, from Merkel

or from Macron and so people should

0:54:100:54:13

matter. But if it turns out that the

EU is really, a really unified

0:54:130:54:20

force, and it doesn't matter who is

actually in charge, I think that's

0:54:200:54:23

going to make the British position,

you know, harder to read.

But

0:54:230:54:29

whatever point of the process you

look at. We are in the position

0:54:290:54:32

where Britain has to come up and pay

and agree on citizens' rights and

0:54:320:54:37

thor Northern Irish bored in phase 2

we might be in different territory

0:54:370:54:42

because national interests will kick

in and persons and people will

0:54:420:54:44

decide but that's not the point yet.

Right, thank you both very much.

0:54:440:54:49

So is it now "Funny Phil"?

0:54:490:54:53

That might be overstating it.

0:54:530:54:55

The Chancellor belied his

"Spreadsheet Phil" nickname

0:54:550:54:57

as he peppered his Budget statement

with a series of jokes

0:54:570:55:00

at the expense of everyone

from Theresa May and Michael Gove

0:55:000:55:02

to Jeremy Clarkson

and Lewis Hamilton.

0:55:020:55:03

I did take the precaution

of asking my right honourable friend

0:55:070:55:10

to bring a pack of cough sweets,

just in case.

0:55:100:55:12

LAUGHTER

just in case.

0:55:120:55:15

Mr Deputy Speaker, I shall first

report to the House on the economic

0:55:190:55:23

forecast of the independent OBR.

0:55:230:55:24

This is the bit with the long

"economicy" words in it.

0:55:240:55:26

LAUGHTER

0:55:260:55:30

Mr Speaker, if they carry

on like that, there will be plenty

0:55:300:55:33

of others join Kesa Dugdale

in saying, "I'm Labour,

0:55:330:55:35

get me out of here."

0:55:350:55:45

Mr Deputy Speaker, I know that

Jeremy Clarkson doesn't

0:55:500:55:53

like them, but there are many other

reasons to pursue this

0:55:530:55:55

technology, so today we step

up our support for it.

0:55:550:55:58

Sorry, Jeremy, but definitely not

the first time you've been

0:55:580:56:00

snubbed by Hammond and May.

0:56:000:56:03

More maths for everyone.

0:56:030:56:04

Mr Speaker, don't let anyone say

I don't know how to show

0:56:040:56:07

the nation a good time.

0:56:070:56:08

Joining us now is the the former

Labour media adviser

0:56:080:56:10

Ayesha Hazarika, who now works

as a stand up comedian

0:56:100:56:13

and Evening Standard columnist.

0:56:130:56:14

Someone shouted out - it's the way

you tell them, Phil. I suppose

0:56:140:56:16

delivery is everything. But actually

maybe from a low bar, some of the

0:56:160:56:20

jokes weren't bad?

I'll say fair's

fair, the bar is low, I know that, I

0:56:200:56:25

used to write jokes for the House of

Commons, it is like you are limboing

0:56:250:56:28

underneath it. I thought he did

quite well. Remember the odds were

0:56:280:56:32

stacked against him. He had a

horrific lead into the Budget,

0:56:320:56:35

everyone saying it is the worst

Budget preparation in the history of

0:56:350:56:38

time, he is hopeless for the chop.

So you forget, the House of Commons'

0:56:380:56:43

Chamber is actually mainly really

dull T comes alive on a number of

0:56:430:56:46

occasions and Budget Day is one of

them. It becomes a stage. It becomes

0:56:460:56:51

a place of theatre and what people

want is good political lines but

0:56:510:56:54

they want to have a bit of a laugh

as well. They at least want their

0:56:540:56:59

principal to try to make jokes, you

know the phrase "God loves a trier."

0:56:590:57:03

It is true on Budget Day in the

House of Commons.

How hard do you

0:57:030:57:07

think his joke writers had to work?

I would suspect they would've spent

0:57:070:57:11

a vast amount of time working on the

jokes. I actually got a nice text

0:57:110:57:15

from one of his advisors late last

night saying - gosh, you should have

0:57:150:57:18

seen the ones that didn't make the

cult.

I'd love to have seen those,

0:57:180:57:22

actually. You could use them

yourself, actually

Steady, on, Jo.

0:57:220:57:26

Sorry. In terms of delivery you can

only work with what you've got. Does

0:57:260:57:30

he deliver it well or not?

Well,

look, he is not a natural gag

0:57:300:57:37

machine, not Phil Giggles Hammond

but the way he worked them well, the

0:57:370:57:42

maths jokes, the best way if you are

not funny is to be self-deprecating,

0:57:420:57:48

everybody thinks he is dull and

boring, so he used that. But

0:57:480:57:51

remember, jokes don't mask the truth

behind the politics.

Do you think it

0:57:510:57:55

was a dissfraction the grim

backdrop?

I think part of it must

0:57:550:57:58

have been. Because he delivered the

jokes pretty early on and I think a

0:57:580:58:02

lot of us were sitting there

watching thinking - wait, did he

0:58:020:58:06

downgrade z...

He did it in about

one minute and then all talked

0:58:060:58:11

about.

I suspect this is all part of

the delivery. We'll face a brighter

0:58:110:58:16

future, let's accept some of this

and maybe have a few giggles. I have

0:58:160:58:21

to say sometimes I groaned a bit.

What about the strep sill, I thought

0:58:210:58:27

it was too staged -- strepsil.

It

was a bit laboured. Remember with

0:58:270:58:36

William Hague, it was a bit

laboured.

0:58:360:58:39

Time to find out the

answer to our quiz.

0:58:390:58:41

The question was, what important

milestone

0:58:410:58:43

has Shadow Education

Secretary Angela Rayner

0:58:430:58:44

just passed in her life?

0:58:440:58:45

Was it: She's just bought her first

house, she's got a degree, she's

0:58:450:58:48

passed her driving test or she's

become a grandmother?

0:58:480:58:50

So what's

the correct answer?

0:58:500:58:52

D.

She has become a grandmother at

the grand-old age of 37.

She's

0:58:520:58:56

Granegela.

Is that what she wants to

be known?

Yes.

0:58:560:59:01

That's all for today.

0:59:010:59:02

Thanks to our guests.

0:59:020:59:05

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